CompUSA 2013 Annual Report Download - page 12

Risks Related to Our Company
We rely on a variety of information and telecommunications systems in our operations. Our success is dependent in large part on
the accuracy and proper use of our information systems, including our telecommunications systems. To manage our growth, we
continually evaluate the adequacy of our existing systems and procedures, and are engaged in transitioning key features of our
current information and operating systems to a new platform we have developed specifically for our needs; delays or operational
problems in effectively implementing the transition could have a material adverse effect on our operations. We anticipate that we
will regularly need to make capital expenditures to upgrade and modify our management information systems, including software
and hardware, as we grow and the needs of our business change. The occurrence of a significant system failure, electrical or
telecommunications outages or our failure to expand or successfully implement new systems could have a material adverse effect
on our results of operations.
Our information systems networks, including our websites, and applications could be adversely affected by viruses or worms and
may be vulnerable to malicious acts such as hacking. The availability and efficiency of sales via our websites could also be
adversely affected by “denial of service”
attacks and other unfair competitive practices. Although we take preventive measures,
these procedures may not be sufficient to avoid harm to our operations, which could have an adverse effect on our results of
operations.
We opened our new shared services center in Budapest, Hungary during the second quarter of 2013. The new facility is currently
providing
certain administrative and back office services to our European business and we expect that it will help drive operational
efficiencies and better serve the Company's pan-
European operating strategy. Our efforts to operate our European business in a
more centralized manner, rather than on an individual country by country basis, will require us to implement changes in our
business processes, eliminate redundancies, relocate and/or hire new personnel, transition our information management systems,
and integrate the new operation into our existing business seamlessly and without disruption to our operations, customers and
vendors. However,
changes in economic, regulatory or political conditions in Hungary, delays in launching or integrating the
facility, delays or operational problems in transitioning our information management systems, a lower than expected impact of the
facility on the Company’
s European operations, costs and capital expenditures, the ability to timely hire and train new employees
in Hungary, and delays, impediments or other problems associated with its establishment, could all have a material adverse effect
on our European operations and our results of operations.
We purchase a substantial portion of our technology products from major distributors and directly from large manufacturers who
may deliver those products directly to our customers. These relationships enable us to make available to our customers a wide
selection of products without having to maintain large amounts of inventory. The termination or interruption of our relationships
with any of these suppliers could materially adversely affect our business.
We purchase a number of our products from vendors outside of the United States. Difficulties encountered by one or several of
these suppliers could halt or disrupt production and delay completion or cause the cancellation of our orders. Delays or
interruptions in the transportation network could result in loss or delay of timely receipt of product required to fulfill customer
orders. Our ability to find qualified vendors who meet our standards and supply products in a timely and efficient manner is a
significant challenge, especially with respect to goods sourced from outside the U.S. Political or financial instability, merchandise
quality issues, product safety concerns, trade restrictions, work stoppages, tariffs, foreign currency exchange rates, transportation
capacity and costs, inflation, civil unrest, outbreaks of pandemics and other factors relating to foreign trade are beyond our control.
These and other issues affecting our vendors could materially adversely affect our revenue and gross profit.
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rely to a great extent on our information and telecommunications systems, and significant system failures or outages, or our
failure to properly evaluate, upgrade or replace our systems, or the failure of our security/safety measures to protect our systems
and websites, could have an adverse affect on our results of operations.
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The establishment and integration of our shared service center in Hungary exposes us to various technology, regulatory and
economic risks.
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We rely on third party suppliers for most of our products and services. The loss or interruption of these relationships could impact
our sales volumes, the levels of inventory we must carry, and/or result in sales delays and/or higher inventory costs from new
suppliers. Co-
operative advertising and other sales incentives provided by our suppliers have decreased and could decrease
further in the future thereby increasing our expenses and adversely affecting our results of operations and cash flows.